What’s the best way to invest in coronavirus vaccine stocks?
Some investors have already made a lot of money so far this year from coronavirus vaccine stocks. But what is the best way to invest in these stocks in the future? In this Fool Live video, Health and Cannabis Office Chief Corinne Cardina and longtime Motley Fool contributor Keith Speights discuss several investment strategies for potentially profiting from coronavirus vaccine stocks.
Corinne Cardin: I’m going to ask you about coronavirus vaccine investment strategies. Next, we will try to answer a few questions that are pouring in.
But depending on someone’s own preferences for balancing risk and reward, there are several different approaches an investor can take. They could buy a basket of all stocks with candidates in phase three trials, or at least those trading on US exchanges. You could buy a basket with some of the phase three companies, one from each of the different vaccine technologies. You can only buy the stocks with existing products in the market, Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE: PFE), Astra Zeneca (NASDAQ:AZN). Or if you’re feeling really bold, you can get into some of the clinical-stage biotechnologies that will really skyrocket if successful. These biotechnologies are known to be quite binary.
What do you think of the strategies? What are the advantages or disadvantages of some of these strategies? What would you say?
Keith Speights: I would say to any investor, ask yourself what is your risk tolerance? I think that will dictate the strategy you pursue.
If you are a very aggressive investor and not afraid to take risks and have a long time horizon and are well diversified I would say you might want to take a look at some of these stage -stocks. In particular, you have Modern (NASDAQ:ARNM), BioNTech (NASDAQ: BNTX), and Novavax (NASDAQ: NVAX) all of which are clinical-stage stocks that are leaders. They all have late-stage applicants, so I think you might want to consider them.
But let’s say you’re not a risk taker. If you’re not such a risk taker, you’ll probably be more comfortable with stocks like Johnson & Johnson or Pfizer or AstraZeneca than opting for one of the smaller clinical-stage biotechs.
Now, regarding the basket approach, I think that might work. But there is one scenario where it wouldn’t work so well. Here’s that scenario where it wouldn’t work out so well: Let’s say you put money in the basket and put an equal amount into these clinical-stage biotechs, like you do at big pharma like Pfizer and J&J. Let’s say none of them succeed, none of the vaccines succeed. Well, all stocks will go down, but small biotech stocks will go down. Don’t think that simply diversifying a basket insulates you from risk. There is always a possibility that it does not work.
Corinne Cardin: There is no 100% strategy, absolutely.
Keith Speights: No.
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